JLL represented American Lithium Energy (ALE), a manufacturer of lithium-ion batteries, in a new 81,928-square-foot lease at 1395 Aspen Way in Vista.  The firm is expanding from 21,473 square feet in Carlsbad and will use the space for R&D, manufacturing and distribution of its batteries. The tenant is scheduled to move into its new space in the fourth quarter.

On the heels of our successful A round and SpaceWERX STRATFI award last year, this facility marks an important milestone for ALE,” said CFO Danny Joe. JLL’s Tim Olson represented ALE in the lease. 

“We continue to see the evolution of San Diego’s diverse economy with advanced manufacturing and other sectors growing in the region,” said Olson.  “We have the expertise and experience to guide companies through the complicated real estate process, allowing them to remain focused on their mission.”

Photo credit: CoStar.

Rockaway Holding Group, LLC has signed a 15-year lease for 124,556 square feet at 25 Green Pond Rd. in Rockaway, NJ. The facility will become one of largest donut manufacturing facilities in North America, producing more than one million donuts daily. 

The move marks a significant expansion for Rockaway Holding Group, which is relocating from its 40,000- square-foot facility in Lodi, NJ. The company plans to invest significant capital in building out the new facility to meet its manufacturing requirements.

“This facility will serve as a transformative hub for Rockaway Holding Group, enabling them to support their client at an even greater scale,” said Daniel Foley, executive managing director, Savills, who represented Rockaway Holding Group. “We are proud to have helped secure a space that meets their ambitious growth and operational needs.”

Ownership of the property, 25 Green Pond Investors LLC, was represented by Stephen Sander and Steve Elman of Cushman & Wakefield.

Anthony Lawrence-Belfair, a furniture company specializing in the manufacturing, distribution, repair and restoration of furniture and home goods, signed a long-term lease for 25,214 square feet of warehouse space and 19,312 square feet of land at Simone Development Companies’ 1200 Zerega Ave. in the Bronx. The new space will serve as a showroom and studio, supporting the company’s relocation from Long Island City.

Simone Development was represented by in-house leasing and legal teams alongside Mat Diana of DY Realty, while Anthony Lawrence-Belfair was represented by Helen Paul of Cushman & Wakefield and Joseph Caputo of Exit Realty Premier.

“With its strategic location, ample outdoor storage options, and flexible space configurations, 1200 Zerega Ave. is an ideal fit for companies like Anthony Lawrence-Belfair,” said Josh Gopan, VP of leasing for Simone Development.

The lease secured the final warehouse and ground-floor space offered at 1200 Zerega Ave. The property has a remaining 12,891 square feet of office space available on the second floor.

Several large deals unveiled this summer suggest that the lull in multifamily capital markets is nearing an end and providing a clear signal that the next liquidity cycle has started, said Tyler Sullivan, who leads JLL’s multifamily capital markets research division.

In June, KKR acquired more than 5,000 apartments from Charlotte-based Quarterra for $2.1B. In August, Equity Residential agreed to acquire 11 Sun Belt multifamily properties from Blackstone totaling 3,600 apartments for $964M. That same month, Blackstone announced it would acquire Apartment Income REIT for $10B in a move to take the publicly traded company private.

In September, AvalonBay raised $700M, with a large portion of the funds earmarked to “tie down land sites,” Sullivan said. 

“These transactions drove the conviction that sophisticated capital is moving and it is time to put strategies into action,” Sullivan said. “Those who control the capital but were sitting on the sidelines are demonstrating an interest in real estate again.”

Lauro Ferroni, JLL head of U.S. capital markets research for the Americas, said a fear of missing out is driving investors to move while making sure their timing is right on the next liquidity cycle. 

“This is not something we had the confidence to call six months ago, but at this point, the data is undeniable,” he said.

Sullivan and Ferroni spoke with Bisnow about the growth in institutional bidding, activity in the development pipeline and the health of housing across markets.

Institutional Capital And Construction Starts

“There’s an uptick in the share of deals where the institutional bidder is the highest bidder,” Sullivan said. “That’s in contrast to the last two years, when private capital dominated the landscape.”

Apartment construction starts slowed noticeably in the last 18 months, but the dearth of groundbreakings will be shorter than many anticipated.

“Some of the best development deals are beginning to pencil as the cost of borrowing has come down,” Sullivan said.

The ground-up development activity is visible in JLL’s equity placement advisory business.

“The volume of deals we have ready to launch is larger than this time last year,” Sullivan said. “A lot of capital was waiting, revving their engines.” 

Floating-Rate Debt

Investors that took out floating-rate loans when rates were at rock bottom during the first two years of the pandemic ran into some challenges when interest rates rose and made it difficult to refinance. JLL estimates commercial real estate landlords have roughly $1.5T of debt coming due by the end of 2025.

“However, now that it has become clearer the economy is headed for a soft landing and interest rates are on a downward trajectory, we are seeing more floating-rate product again,” Sullivan said. “Previously, it was predominantly fixed-rate.”

Investors’ renewed confidence is visible in the kinds of debt they are comfortable taking on, he said. 

Gateway Cities And The Sun Belt

Of all housing units recently delivered to the market, an overwhelming majority have been in the higher price tiers, while only 6% are workforce or naturally occurring affordable housing, Sullivan said.

The supply of higher-end units is especially pronounced in markets like Nashville, Phoenix and Las Vegas.

But while Sun Belt cities are seeing limited rent growth due to oversupply, gateway cities such as New York, Boston, Washington, D.C., and Chicago aren’t struggling as much with this issue.

“The outperformance in gateway cities has been the story of the year,” Sullivan said. “Meanwhile, cities in the Rust Belt don’t have an oversupply problem, but there is less conviction around job growth in these areas.”

Over the long term, the Sun Belt will continue to be a growth driver for multifamily and housing in general, Sullivan said.

“Young professionals continue to move to gateway markets after graduation, but once those individuals start thinking about starting a family and looking for more space, they tend to look to the Sun Belt because of its affordability,” Sullivan said.

That said, recent rent growth dynamics suggest the economic growth of Sun Belt markets isn’t siphoning growth from gateway markets.

“The U.S. has talent nodes expanding in states including North Carolina, Tennessee and Texas,” Sullivan said. “It’s just another testament to the dynamism and resilience of the U.S. economy.”

Single-Family Rentals

Given the 4-million-unit undersupply of homes in the U.S., more people are choosing to rent, and the market is responding by delivering purpose-built single-family rental communities. 

“We expect this trend to continue,” Sullivan said. “It’s harder to predict the long-term future of what will happen to the U.S.’ chronic undersupply of housing and whether it will get resolved.”

New Categories Of Housing

Real estate as an asset class was pressure-tested during the pandemic and again during the elevated interest rate environment, yet investors continued to allocate capital to it, Ferroni said.

“The desire to invest in real estate is an incredibly durable trend,” he said. “What is changing is how they are allocating across categories of real estate. Investors generally continue to trim their allocations into office, with the housing sector being a beneficiary.”

Investors are also broadening their definition of housing beyond multifamily rentals to include single-family rentals, student housing, senior housing and manufactured housing, he said.

They are also homing in on a relatively new category, attainable housing, that sits between market-rate multifamily and government-subsidized affordable housing.

“It’s less amenitized, with fewer frills, but it gets units to the communities that need them,” Ferroni said.

This article was produced in collaboration between JLL and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com. 

The National Football League’s (NFL) Jacksonville Jaguars have received tentative approval for their plans to rebuild the EverBank Stadium, as part of a $1.4 billion deal with city leaders. The franchise and city will pay $625 million each for the $1.25 billion project. The City of Jacksonville will contribute a further $150 million to help prepare the EverBank Stadium for construction in 2026. No new taxes will be introduced to pay for the rebuild. The deal also includes a 30-year lease, keeping the team in Jacksonville.

The Jaguars hope to begin construction after the 2025 season and plan to play in front of a reduced capacity in 2026. Jacksonville’s city council will vote on the proposal for the rebuild in late June. Should it be passed by a majority, NFL owners will then decide whether to approve the project in October.

Daniel Corp. has acquired two parcels at 306 N. Graham St. and 420 W. Sixth St. in Uptown Charlotte that have been on the market for three years. The Atlanta Business Chronicle reports the developer paid $9 million for the two sites, which total 1.6 acres along North Graham Street between West Sixth and Seventh Streets. Capstone Cos. listed the site for sale in Nov. 2020. For the three years the land has been on the market, Daniel has been actively pursuing it. The company has been working on zoning and permitting issues on the site since 2021.

Daniel Corp. is planning a 241-unit, seven-story building offering studio, one- and two-bedroom apartments. The property will include an elevated pool deck, coworking space, state-of-the-art fitness studio, two-story resident social space, conditioned bike storage and repair room, resident-only market on site, and secured and covered parking. The project will include 1,500 square feet of ground-floor retail space.

Birmingham-based Brasfield & Gorrie is the general contractor.